Cardlytics, Inc.CDLX
Cardlytics, Inc. Income Taxes Disclosure
INCOME TAXES
Domestic and foreign components of loss before income taxes are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (98,691) | $ | (179,555) | $ | (122,026) | |||||||||||
| Foreign | (4,797) | (9,749) | (12,676) | ||||||||||||||
| Loss before income taxes | $ | (103,488) | $ | (189,304) | $ | (134,702) | |||||||||||
The significant components of income tax (expense) benefit are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total current | — | — | — | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | — | — | — | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Change in uncertain tax positions | — | — | — | ||||||||||||||
| Change in valuation allowance | — | — | — | ||||||||||||||
| Total deferred | — | — | — | ||||||||||||||
| Income tax benefit | $ | — | $ | — | $ | — | |||||||||||
We adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis beginning with the year ended December 31, 2025. A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate for the year ended December 31, 2025 is presented accordingly as follows (dollar amounts in thousands):
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| Statutory federal income tax rate | $ | (21,732) | 21.00 | % | |||||||
| State and local income taxes, net of federal benefit | — | — | % | ||||||||
| Tax credits | |||||||||||
| Federal research & development | (1,490) | 1.44 | % | ||||||||
| Changes in valuation allowance | 5,263 | (5.09) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Stock compensation | 5,705 | (5.51) | % | ||||||||
| Goodwill impairment | 10,316 | (9.97) | % | ||||||||
| Other | 321 | (0.31) | % | ||||||||
| Other reconciling items | 237 | (0.23) | % | ||||||||
| Unrecognized tax benefits | 373 | (0.36) | % | ||||||||
| Foreign tax effects: | |||||||||||
| United Kingdom: | |||||||||||
| Fair value adjustments | 2,228 | (2.15) | % | ||||||||
| Other | (1,234) | 1.19 | % | ||||||||
| Other jurisdictions | 13 | (0.01) | % | ||||||||
| Total provision for income taxes | $ | — | — | % | |||||||
The following table summarizes the significant differences between the U.S. federal statutory tax rate and our effective tax rate for the years ended December 31, 2024 and 2023 based on the required disclosure prior to our adoption of ASU 2023-09:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax benefit at federal statutory rate | 21.00 | % | 21.00 | % | |||||||
| State income taxes, net of federal benefit | — | % | (0.01) | % | |||||||
| Change in federal and state statutory rate | 1.69 | % | 0.01 | % | |||||||
| Foreign rate differential | 0.06 | % | (0.22) | % | |||||||
| Goodwill impairment | (13.06) | % | (10.94) | % | |||||||
| Contingent liability remeasurement | (0.78) | % | (0.81) | % | |||||||
| Other adjustments | (1.61) | % | (1.40) | % | |||||||
| Valuation allowance | (7.24) | % | (7.54) | % | |||||||
| Income tax benefit | 0.06 | % | 0.09 | % | |||||||
There was no cash paid or refunds received for income taxes for the year ended December 31, 2025. Therefore, there are no jurisdictions accounting for 5% or more of the total cash paid for income taxes.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Certain unrecognized tax benefits are presented as a reduction to related deferred tax assets in our consolidated balance sheets. The significant components of deferred income taxes as of December 31, 2025 and 2024 are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carry-forwards | $ | 176,226 | $ | 161,418 | |||||||
| Allowance for credit losses | 860 | 1,474 | |||||||||
| Depreciation and amortization | 17,374 | 23,233 | |||||||||
| Stock-based compensation | 2,329 | 3,025 | |||||||||
| Deferred costs | — | 740 | |||||||||
| Lease liability | 1,345 | 1,867 | |||||||||
| Other tax credit carry-forward | 12,742 | 11,625 | |||||||||
| Other | — | 1,451 | |||||||||
| Total | 210,876 | 204,833 | |||||||||
| Valuation Allowance | (209,423) | (203,377) | |||||||||
| Total deferred tax assets, net of valuation allowance | $ | 1,453 | $ | 1,456 | |||||||
| Deferred tax liabilities: | |||||||||||
| Right of use assets | (995) | (1,457) | |||||||||
| Deferred costs | (332) | — | |||||||||
| Other | (126) | — | |||||||||
| Total deferred tax liabilities | (1,453) | (1,457) | |||||||||
| Net long-term deferred tax asset | $ | — | $ | — | |||||||
We have generated historical net losses and recorded a full valuation allowance against our net deferred tax assets, and we expect to maintain a full valuation allowance in the near term. Realization of any of our net deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.
We recorded a valuation allowance for deferred tax assets of $209.4 million, $203.4 million, and $189.7 million as of December 31, 2025, 2024, and 2023, respectively. The net increase of our valuation allowance each year is primarily due to the continued generation of net operating loss carryforwards.
As of December 31, 2025 and 2024, we have $690.0 million and $631.6 million, respectively, of gross U.S. federal net operating loss carry-forwards that will begin to expire in the 2028 tax year. Additionally, we have $302.0 million and $269.1 million of gross state net operating loss carry-forwards as of December 31, 2025 and 2024, respectively, some of which have expiration dates and will begin to expire between 2025 and 2045.
As of December 31, 2025 and 2024, we have $15.7 million and $14.2 million, respectively, of federal research and development ("R&D") tax credit carryforwards. These credits expire/start expiring between 2038 and 2045.
Ownership changes, as defined by Code Section 382, may limit the amount of net operating losses that a company may utilize to offset future taxable income and taxes payable. Pursuant to Code Section 382, an ownership change occurs when the stock ownership of 5% stockholders increases by more than 50% over a testing period of three years. We have experienced ownership changes in the past, with the last identified ownership change occurring on April 2, 2020. We have analyzed whether we have experienced an additional ownership change through December 31, 2024 and have not identified an ownership change. It is possible that we have experienced additional ownership changes or that we may experience additional ownership changes in the future. Any such ownership change may limit our ability to utilize net operating losses.
As of December 31, 2025 and 2024, Cardlytics UK had gross net operating losses of $53.6 million and $50.0 million, respectively. Foreign net operating loss carry-forwards expire according to the rules of each country. In the U.K., there is an indefinite carry-forward period. As of December 31, 2025, Cardlytics UK held cash and cash equivalents of $5.0 million. While our investment in Cardlytics UK is not considered to be permanently invested, we do not plan to repatriate these funds. Further, although the tax basis of our investment in Cardlytics UK exceeds its book basis, we have not recorded a deferred tax asset since we do not believe that a reversal of this temporary difference will occur in the foreseeable future.
The Organization for Economic Cooperation and Development has developed guidance known as the Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15% and are intended to apply to tax years beginning in 2024. As of December 31, 2025, based on the countries in which we do business that have enacted legislation, including the U.K., we do not expect these rules to have a material impact on our income tax provision.
The following table summarizes the activity related to our gross unrecognized tax benefits that would affect our effective tax rate, if recognized (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 3,550 | $ | 2,925 | $ | 1,606 | |||||||||||
| Increase related to current year tax position | 373 | 625 | 1,319 | ||||||||||||||
| Ending balance | $ | 3,923 | $ | 3,550 | $ | 2,925 | |||||||||||
All such positions, if recognized, would impact our effective tax rate.
We recognize interest and penalties accrued on income tax uncertainties as a component of income tax expense/benefit. In 2025, 2024 and 2023, we did not recognize a benefit or expense for interest and penalties. As of December 31, 2025 and 2024, there are no accrued interest and penalties related to unrecognized tax benefits in the accompanying consolidated balance sheet.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our tax filings from inception remain subject to income tax examinations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 3, 2020 | |
| 2018 | Mar 5, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.